John Kasich’s Billion-Dollar Medicaid Expansion Bluff

Governor John Kasich has wagered he can pressure the Republican-controlled Ohio General Assembly into expanding Medicaid by telling legislators they cannot stop billions in federal Patient Protection and Affordable Care Act (PPACA) spending. With the complicity of Ohio’s media, he may be right.

The governor, a Republican with a reputation for fiscal conservatism, insists Medicaid expansion would keep “Ohio’s tax dollars” in the state instead of letting them be spent elsewhere. It’s a simple argument – federal spending will be the same regardless, so only a fool would oppose keeping some of it in Ohio – that also happens to be completely false.

Seeking the source of this talking point, Media Trackers reached out to the governor’s office and to numerous pro-expansion groups. The governor’s office did not respond.

Health Policy Institute of Ohio (HPIO) spokesman Nick Wiselogel confirmed, “That assertion is not something that has been included in any of HPIOs publications or materials related to Medicaid expansion in Ohio.”

“Having talked with our attorney, you are correct that the states that deny the funding would not be shared with other states,” wrote Tom Smith of the Ohio Council of Churches, “but would be retained so that states who decided later that they wanted to be included could do so but would lose one year of 100% funding for each year that they delayed taking the money.”

“The Governor decided that it would be wrong to deny the low-income families in Ohio the opportunity to be insured while families in New York, California and many other states would qualify for coverage.”

Alanna Williamson of the Kaiser Family Foundation explained, “The point being made is that taxes paid to the federal government by people in states that do not expand their Medicaid programs will be spent only in states that do choose to expand. So, citizens will be paying into a federal program without experiencing the benefits in their state.”

Media Trackers provided Williamson quotes of the more specific claims Governor Kasich has made, but received no further response in time for publication.

How important is this unfounded narrative in Kasich’s pitch for the PPACA Medicaid expansion? Governor’s Office of Health Transformation Director Greg Moody included it in February 14 testimony before the House Finance and Appropriations Committee, and the governor repeated it during his February 19 State of the State address.

“Would I rather we take the money, and not spend it, and draw down the federal debt? Absolutely. But that is not within my range of ability, and not within the range of a governor’s ability to do,” Moody told legislators.

“If we don’t spend it, it is not as if that money is going to be somehow saved,” Moody added. “We are still paying that in our federal taxes. The question is, is it coming back to Ohio, or is it going somewhere else.”

A presentation accompanying Moody’s testimony described all of the PPACA Medicaid expansion funds Ohio could receive as “Ohioans’ federal tax dollars.”

The governor also called the PPACA Medicaid expansion “an unprecedented opportunity to bring $13 billion of Ohio’s tax dollars back to Ohio to solve our problem.”

Ohio newspapers have frequently cited the Kasich Administration’s claims, indicating they realize it matters whether Ohio can prevent new deficit spending. Skepticism of these claims has been absent from news and op-ed columns alike, although Kasich’s assertions about how PPACA Medicaid expansion funding works contradict everything else reporters have written about the expansion.

To coerce states into extending Medicaid to able-bodied adults below 138 percent of the federal poverty line, PPACA promises the federal government will pay 100 percent of states’ costs to cover newly eligible individuals from 2014-2016. Starting in 2017, federal funding for the PPACA Medicaid expansion will be gradually reduced to 90 percent.

Since the law does not create a defined pool of money to be divided among compliant states but rather an open-ended promise of new federal spending, how could rejecting the expansion send “Ohio’s” PPACA Medicaid expansion funds to other states?

Is Kasich suggesting the federal government would pay California to expand coverage to, for instance, 150 percent of the poverty line, instead of 138 percent? Or that the federal government would pay 100 percent of the cost for newly-eligible New Yorkers through 2018 instead of 2016?

The truth is, California will increase the $16.7 trillion national debt by expanding Medicaid, as will New York and every other state pursuing billions per year in new federal funding. Ohio can make this problem worse by adopting the PPACA Medicaid expansion, but nothing Ohio does will have any impact on how many federal dollars are distributed to other states.

For more than six weeks, Governor Kasich has tried to convince Ohioans that the losing hand of PPACA Medicaid expansion is a royal flush. Instead of asking the governor to show his cards, Ohio’s legacy media have broadcast this false narrative across the state.